UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): ~~May 26~~July 31, 2006

Prescient Applied Intelligence, Inc.

(Exact Name of Registrant as Specified in Charter)

Delaware		000-21729		73-1247666
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification Number)

1247 Ward Avenue, Suite 200

West Chester, Pennsylvania 19380

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (610) 719-1600

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On ~~May~~July 2631, 2006, Prescient Applied Intelligence, Inc. (the “Company”), entered into a ~~sixty-four~~Settlement ~~month~~and ~~Office~~Mutual ~~Lease~~Release Agreement with ~~Trizec~~TAK ~~Partners~~Investments, ~~Real Estate~~LLC, ~~L.P.~~ (~~the~~ “~~Office Lease Agreement~~TAK”) ~~for~~a ~~the~~Delaware ~~lease~~limited ofliability ~~approximately 3~~company,~~523~~ ~~square~~and ~~feet~~Healthcare ofBPO ~~office space located at One Galleria Tower~~Partners, ~~Suite~~a ~~1015, 13355 Noel Road, Dallas,~~ Texas. ~~The~~limited ~~lease~~partnership ~~will~~and ~~commence~~an noaffiliate ~~later~~of ~~than June 1,~~TAK ~~2006.~~(the ~~The~~“Settlement ~~Company intends to use this area primarily as office space~~Agreement”). The ~~average~~Settlement ~~base rent that the Company will pay pursuant to the Office Lease~~ Agreement is $0conditioned ~~per~~upon ~~month for months 1 – 3; $6,752.42 per month for months 4 –~~the ~~39;~~approval $0of ~~per~~the ~~month~~holders ~~for~~of ~~month~~two-thirds 40of ~~and~~the ~~$7,046.00~~Company’s ~~per~~Series ~~month~~E ~~for~~Convertible ~~months~~Preferred ~~41 – 64~~Stock. ~~Pursuant~~A tomeeting ~~the terms~~ of the ~~Office~~holders ~~Lease~~of ~~Agreement,~~ the Company’s isSeries ~~responsible~~E ~~for~~Convertible ~~its~~Preferred ~~pro-rata~~Stock ~~share~~is ofscheduled ~~certain~~for ~~expenses including taxes~~Thursday, ~~insurance~~August 10, ~~maintenance and utilities at the property~~2006. ~~For accounting and tax purposes, the lease is to be treated as an operating lease.~~

~~The~~If ~~foregoing~~the ~~description~~Settlement Agreement is approved by the holders of the ~~Office~~Company’s ~~Lease~~Series ~~Agreement~~E ~~does~~Convertible ~~not~~Preferred ~~purport~~Stock, tocertain bedisputes ~~complete~~among the parties arising from a May 4, 2005 Common Stock and isWarrant ~~qualified~~Purchase inAgreement ~~its~~and ~~entirety~~a byconcurrently ~~reference~~executed toRemote ~~the~~Outsourcing ~~Office~~Agreement ~~Lease~~(the “Outsourcing Agreement,”) ~~which~~will isbe ~~attached~~resolved. ~~hereto~~Under asthe ~~Exhibit~~terms ~~10.1.~~of the Settlement Agreement, the settlement provides for:

In• ~~connection~~The ~~with~~termination ~~the above Office Lease Agreement for 3,523 rentable square feet, on May 31, 2006, the lease agreement between the Company and Trizec Partners Real Estate, L.P. for the lease~~ of ~~approximately 11,658 square feet of office space located at Three Galleria Tower, 13355 Noel Road, Dallas, Texas, will be terminated pursuant to~~ the ~~terms~~Outsourcing ~~of a Lease Termination~~ Agreement entered into between the parties (the “Lease Termination Agreement”). The Company entered into the Lease Termination Agreement in order to reduce its expenses associated with its office in Dallas, Texas. The Company will have no financial or other continuing obligations associated with this property after May 31, 2006. ;

• The ~~foregoing~~cancellation ~~description~~ of ~~the~~all ~~Lease~~of ~~Termination~~Tak’s ~~Agreement does~~equity ~~not~~securities ~~purport~~in tothe beCompany ~~complete~~(10,231,612 ~~and~~shares isof ~~qualified~~Common inStock ~~its~~and ~~entirety~~warrants ~~by reference~~ to ~~the~~purchase ~~Lease Termination Agreement~~1,534,091 ~~which~~shares isof ~~attached~~Common ~~hereto as Exhibit 10.2.~~ Stock);

~~The~~• ~~Company~~A ~~does~~mutual ~~not~~general ~~have~~release ~~any~~by ~~material~~TAK ~~relationship~~and ~~with Trizec Partners Real Estate, L.P. other than in connection with~~ the ~~Office~~Company ~~Lease~~of ~~Agreement~~all ~~and~~claims ~~Lease~~against ~~Termination~~each ~~Agreement.~~ other;

•

A three year secured approximately $2.6 million promissory note issued by the Company to Tak that bears interest at the prime rate plus 2%, which is payable at a rate of $30,000 per month with the remaining amounts due at the end of the three year period; and

•

A warrant issued to Tak to purchase 1,000,000 shares of Common Stock in the Company at an exercise price equal to 110% of the closing share price of the Common Stock on the trading day immediately preceding the date the warrant is issued. The warrant expires on December 31, 2006.

The Outsourcing Agreement provided for the transition of certain hosting services and the outsourcing of certain development projects to TAK in accordance with an agreed upon schedule over a five-year term. Assuming full performance under the terms of the Outsourcing Agreement, the Company’s total commitment over the term of the Outsourcing Agreement was approximately $7.3 million.

Item 1.02 Termination of a Material Definitive Agreement.

The information set forth under Item 1.01 of this report is incorporated herein by reference.

ITEM 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 of this report is incorporated herein by reference.

ITEM 9.01 Financial Statements and Exhibits.

(d) Exhibits.


10.1		Settlement Agreement and Mutual Release dated July 31, 2006 by and among the Company, TAK Investments, LLC and Healthcare BPO Partners.

99.1		Press Release issued by the Company on July 31, 2006.

Exhibit 10.1. Office Lease Agreement between Trizec Partners Real Estate, L.P. and Prescient Applied Intelligence, Inc. for the premises located at One Galleria Tower, Dallas, Texas.

Exhibit 10.2. Lease Termination Agreement between Trizec Partners Real Estate, L.P. and Prescient Applied Intelligence, Inc. for the premises located at Three Galleria Tower, Dallas, Texas.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Prescient Applied Intelligence, Inc.
Date: May 31, 2006	By:	/s/ Thomas W. Aiken
Date: July 31, 2006	By:	/s/ Thomas W. Aiken
		Thomas W. Aiken
		Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number		Description
10.1		~~Office~~Settlement ~~Lease~~ Agreement ~~between~~and ~~Trizec~~Mutual ~~Partners~~Release ~~Real~~dated ~~Estate~~July 31, ~~L.P.~~2006 by and ~~Prescient~~among ~~Applied~~the ~~Intelligence~~Company, ~~Inc.~~TAK ~~for~~Investments, ~~the~~LLC ~~premises~~and ~~located~~Healthcare atBPO ~~One Galleria Tower, Dallas, Texas~~Partners.
10.2		Lease Termination Agreement between Trizec Partners Real Estate, L.P. and Prescient Applied Intelligence, Inc. for the premises located at Three Galleria Tower, Dallas, Texas.
99.1		Press Release issued by the Company on July 31, 2006.

Filing Compare · Prescient Applied Intelligence, Inc.